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Identity and Redistribution: Theory and Evidence
Author(s) -
Dhami Sanjit,
Manifold Emma,
alNowaihi Ali
Publication year - 2021
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/ecca.12352
Subject(s) - ultimatum game , ingroups and outgroups , redistribution (election) , social identity theory , social psychology , outgroup , salient , inequity aversion , identity (music) , economics , prosocial behavior , identity politics , empirical evidence , politics , psychology , positive economics , microeconomics , welfare economics , inequality , social group , political science , law , epistemology , mathematical analysis , philosophy , physics , mathematics , acoustics
We propose a theoretical model that embeds social identity concerns, as in Akerlof and Kranton (2000), with inequity averse preferences, as in Fehr and Schmidt (1999). We conduct an artefactual ultimatum game experiment with registered members of British political parties, for whom political identity is salient and redistribution is also likely to be salient. The empirical results are as follows. (1) Proposers and responders demonstrate ingroup‐favouritism. (2) Proposers exhibit quantitatively stronger social identity effects relative to responders. (3) As redistributive taxes increase, average offers by proposers and the average minimum acceptable offers of responders (both as a proportion of income) decline by almost the same amount, suggesting a shared understanding that is characteristic of social norms. (4) Subjects experience less disadvantageous inequity from ingroup members relative to outgroup members.